How to cost effectively resource your practice
The largest cost for any accountancy practice is wages. Therefore, in this article we look at the three main ways in which you can cost effectively resource your practice.
Work out what you need in advance!
Planning your resourcing requirements in advance means you give yourself the best chance to minimise the cost of your resource. Unexpected resourcing requirements such as emergency hires, whether permanent, temporary, subcontracting, or overtime always costs much more than normal. The best way to plan your resourcing requirements is to model your future requirements.
A good way to model and understand your current and future capacity requirements is to by client, understand what work needs to be done when, and then the likely time it will take to do. This can normally be done simply on a spreadsheet. It’s also best done on a month-by-month basis so you can take account of changing requirements such as new client wins, client loses and any new holiday or study leave requests. Then aggregate this up so you can see a top-level view of what capacity is required by month for your firm. Then look at the current resource available to you month by month, and identify the months where you have spare resource, and where you are under resourced. Once you have done this it is now time to look at how these capacity requirements will change as your firm grows. Then overlay your current capacity requirements with your predicted future capacity requirements. This analysis will help you very simply understand which months you are likely to be short of capacity. And, therefore, what you can do now to plan ahead and potentially bring work forwards.
Outsource your excess workload
Our clients tend to use us to cover both their normal level of demand but also any peaks in workload, such as the peak months for doing December and March year end accounts. Our clients normally find that we can help them service their clients’ year end accounts up to 50% cheaper than they can themselves. The fact that our clients can switch as on and off, and are not tied into an annual contract or minimum number of hours, means we are often initially called in to help our clients service their clients at peak periods.
The benefits of outsourcing are more than just being able to more cost effectively service your firm’s compliance work. Outsourcing your compliance work to us can free up your staff to do more of the higher value stuff, like building strong relationships with clients, which you need them to be doing and they want to do. Given how hard it is in the UK to recruit in decent qualified members of staff, many firms are outsourcing to us as a way of increasing their capacity without having to externally recruit. Often firms find the act of defining their work processes, ready for outsourcing, to be hugely beneficial. After all, the last thing you want to do is outsource unwieldy or inefficient ways of working to us.
Hiring apprentices, particularly given the incentives businesses in the UK are given to hire apprentices, can be an incredibly cost-effective way of resourcing your practice. Particularly if you are looking for your first or second employee and your cash flow is tight. For example, in the UK, you can pay apprentices £3.50 an hour, rather than the current national minimum wage of £7.50. However as with everything in life, there is a reason you are allowed to pay apprentices so little.
It’s a big shift to go from school to the world of work. After all these apprentices, whilst full of enthusiasm, often turn up knowing absolutely nothing about accountancy or the world of work. They are going to be on a very steep learning curve.
Leaving them to their own devices, i.e. not being ultra-clear about what you want them to do, could be an expensive way to let them make mistakes. Therefore, they will need very close supervision. So, unlike your more experienced hires, you will need to be in contact with them more often, spell out what is expected of them more regularly, and create the time to guide them appropriately. This means that whilst you may not be paying much in terms of wages for an apprentice you will need to factor in far more supervision and management time to develop them.